USD/JPY was soft leading in to Tokyo and is mixed with a mixed open in the Nikkei, despite a strong performance overnight on Wall Street given the better risk mood circulating the financial market's arena mid week overnight. USD/JPY rallied from lows of 106.57 to the 107.07 the high and just below the vicinity of the descending 20 sma on the 4hr-sticks at 107.19. Supply came in and took the major back to oscillate within a narrow range for the rest of the US late session and into early Asia. We are still being driven by sentiment around whether the Fed are going to be in a position to hike this year, and in recent times, the declining spreads have been supporting the Yen. The question now is whether that spread between JGB's and US T-Bills (currently 181.4 10Y spread) can get much more positive in favour of the dollar should the Fed be unable to continue normalising rates this year? There is a case to be made, that in fact, US rates are already effectively going to be close to zero or even negative if the Fed does not hike rates as inflation continues to rise: Fed is behind the curve and headed negative USD/JPY: 105.5 on the cards? USD/JPY has the Momentum indicator in the 4hr sticks holding flat below the 100 level while the RSI indicator has barely bounced form oversold readings, as noted by Valeria Bednarik, chief analyst at FXSytreet who explained that is also reflecting the absence of buying interest around the pair. "Despite movements are expected to be moderated, a break below the 106.60 level should open doors for a steeper decline, down to 105.50 May´s low."